Financial Planning Misconceptions

Financial Planning is a dynamic process of identifying financial resources and allocating these resources to realize your financial goals.

In the last 4 years of my financial counseling career, I have met many clients/prospects who have (had) misconceptions about Financial Planning. Below are few for your reading:

Financial Planning is only for the rich

I do not have money/savings to invest, hence I do not require financial planning right now

I am just 25, into first job, so I can postpone my planning

Insurance Planning is Financial Planning

Tax Planning is Financial Planning

Financial Planning is a one-time process

Engaging a Financial Planner means losing control on your finances.

Nothing will happen to me right now

I have enough money and confident that I can meet my post retirement living expenses

I am going to inherit lot of wealth from my parents. Hence, there is no need to prepare a financial plan

If you have any of the above misconceptions then suggest you to work on your finances immediately.

I am not of the view that you must engage a Financial Planner to manage your finances. But, I am suggesting you to have a realistic and well thought out financial plan. Once you have a Plan then kindly implement and review it periodically. If you require professional help then do not hesitate to consult unbiased financial planner/advisor. May be, the advisor may clear some of your misconceptions (if any).

There are no right or wrong financial products. You need to select the right product as per your financial goals, time frame and requirements. At the same time, there are good and bad advisors (as is the case with any form of businesses) in the market. Be informed about the pros and cons of the chosen financial product. Be financially literate to make your hard-earned money work for you.

If you have any misconception about financial planning process then kindly leave a reply in the below comment section. I will be more than happy to answer your query.

Sreekanth Reddy

Sreekanth is the Man behind ReLakhs.com. He is an Independent Certified Financial Planner (CFP), engaged in blogging, financial counseling & property consultancy for the last 6 years through his firm ReLakhs Financial Services . He is not associated with any Financial product / service provider.
The main aim of his blog is to "help investors take informed financial decisions."

Comments

rajesh siddisays:

July 16, 2015 at 4:37 pm

Hi Mr Shrikant

I liked your articles
Im 31 yrs of age
And i want to start my sip
My question is am i late to start sip
I know i should have started eirlier but i did not had my job secured and flow of money every month was not guranted and now that i have confidance that my monthly flow of income will be steady i want to know if im late now to start my sip
My period of investment in sip would be 30 years i have 2 kids and also will be investing in their education and health plans
Im sure most of people here will have same question as i have
Please enlighten
Or may be u can share your views on proper age to start investing
I will start investing from now but want to knw if im going in right direction

Dear Rajesh,
Better late than never. Also note one more point – “Not taking enough RISK is itself the BIGGEST RISK”.
Before working on Investment planning, you may have to analyze if you have sufficient insurance coverage??
Do you have any existing life insurance plans? What abt health insurance?

I investef in iciciprulife life stage pension plan in 2009.Ipaid three instalment of 60000 after that i stopped paying.In 2011 i switch to pension R.I.C.H fund and pension flexi growth.At presernt now i am getting the profit (60000*3=180000) 155000=00.Total amount i am getting is 335000=00.So i wasnt to know should i continue or i quit.Please suggest me asap.

Dear Jessi,
Normally in any ULIP, in the initial years, lot of charges will be deducted from the premiums paid by policy holders. If you are making profits now, it is good. But do consider if it prudent enough to invest this amount in equity mutual funds. You may get even better returns without any commitments (premium payments).

Dear Jessi,
Kindly let me know about your Financial Goals.
If you have any goal which is more than 10 years away from now, suggest you to invest this amount in couple of good balanced funds. Read my article on “Top Balanced funds.”
Also, do you have dependents? Do you have term insurance plan?